Significant cases

Dyno-Rod v Reeve

Dyno-Rod sought to enforce a covenant restraining an outgoing franchisee from competing, following termination of his franchise, in his previous franchise area. The ex-franchisee argued that such was unenforceable being an unlawful restraint of trade. Neuberger J held that it was enforceable, in particular because a franchisor was entitled to protect new franchisees from competition from outgoing ex-franchisees. This principle was approved in Chipsaway v Kerr where the Court of Appeal, held, in overturning the first instance judge’s decision, that such covenants were to give franchisors “breathing space” to bring in a new franchisee.